Impact of Pradhan Mantri Jan Dhan Yojana Schemes on Poor Households

Aims and Objectives: The research aims to assess the impact of PMJDY schemes on the financial behavior of the poor in rural Bihar and identify the key perceived barriers preventing financial inclusion for poor households.

Methodology: The study was conducted in eight villages across Patna and Samastipur districts. Data collection involved both secondary and primary survey data. A multi-stage sampling procedure was employed to select specific blocks and villages for the study. In Patna district, the Phulwari block included Mahuli and Simra villages, and the Dhanarua block included Dhanarua and Sain villages. In Samastipur district, the Dalsinghsarai block included Dalsinghsarai and Madhaipur villages, and the Pusa block included Harpur Mohmada and Moresand villages.

Key Findings:

1. IT Development:
   • Critical for improving financial inclusion.
   • Despite PMJDY’s mobile banking provision, most poor households only use simple mobiles for calls and are unaware of features like receiving bank updates via messages.
   • Collaboration between government, IT sector, and banks is essential to train the poor in using mobile financial applications.
2. Financial Literacy:
   • Respondents lacked awareness of PMJDY features like overdraft facilities, accidental insurance, and life insurance.
   • Financial literacy programs are crucial to enhance financial inclusion and improve financial decision-making.
   • Education level impacts likelihood of being formally banked:
     • Primary education increases likelihood by 11.4%.
     • Secondary education increases likelihood by 16.9%.
     • Tertiary education increases likelihood by 52%.
3. Withdrawal Limitations:
   • PMJDY account holders face a withdrawal limit of ₹10,000 per month.
   • This limit should be reconsidered to improve the scheme’s functionality.
4. Savings Products:
   • Current bank savings products are designed for regular wage earners and may not suit casual rural workers.
   • Need to design financial products based on the socio-economic profiles of rural people.

Recommendations:

1. Enhance IT Infrastructure:
   • Improve IT infrastructure to support financial inclusion.
   • Train poor households on mobile banking and financial transactions.
2. Promote Financial Literacy:
   • Implement widespread financial literacy programs to educate poor households on PMJDY features and benefits.
   • Focus on raising awareness and imparting financial knowledge to improve financial decision-making.
3. Reevaluate Withdrawal Limits:
   • Remove or increase the monthly withdrawal limit to allow better access to funds for PMJDY account holders.
4. Develop Tailored Savings Products:
   • Create savings products that cater to the needs of casual workers in rural areas.
   • Ensure financial products are designed considering the diverse socio-economic profiles of rural populations.